1. This is a photographic template – your photograph should fit precisely within this rectangle. Operational Excellence - (Re)Structure for growth and stakeholder value Anders Davas Eaton Aerospace Aerospace & Defence Forum - Orange County Chapter September 6, 2012

2. 2 2 Introduction Introduction Anders Davas Work Experience Division Manager Eaton Aerospace VP & GM Telair International (A Teleflex Company) Strategic Development Teleflex Operations DirectorEnsas Education The Wharton School University of Cambridge Chalmers – University of technology

3. 3 3 Introduction Introduction Eaton Aerospace - Fuel & Inerting Systems Key Platforms Boeing 787 Airbus A380 Sikorsky CH-53K KC-46A Key Platforms Boeing 787 Airbus A380 Sikorsky CH-53K KC-46A Pedigree First electric boost-pump manufacturer First composite-wing integrated system Complete ground-to-engine capability Pumps for all power sources Pedigree First electric boost-pump manufacturer First composite-wing integrated system Complete ground-to-engine capability Pumps for all power sources Future Platform Innovations Composite conveyance & equipment for low-cost, light-weight composite wings Integrating in-tank sensing with inerting control for reduced bleed consumption Future Platform Innovations Composite conveyance & equipment for low-cost, light-weight composite wings Integrating in-tank sensing with inerting control for reduced bleed consumption Northrop X-47 Eurofighter Learjet 85 KC-390 Refueling Nozzle Engine Feed Tube Flexible Coupling Engine Feed Pump and Canister Technologically Advanced Thermally Efficient Fuel Pump Transfer & Scavenge Jet Pumps Motor Operated Shut-off Valves Motor Control Unit Air Separation Module Pedestal Mounted Ball Valve Pressure Transducer Digital Fuel Gauging

4. 4 4 Introduction Introduction Agenda Introduction 4-Focus Model Strategy Processes People Systems Pilot Implementation Q & A

5. 5 5 Introduction Introduction Operational Excellence Model – Proven results EBITDA Margins 2009 40% 2010 43%+ 2011

6. 6 6 Introduction Introduction Turn Operational Excellence into a competitive advantage Value Cost Company move to the left Increasing Labour Cost Decreasing Labour force Frontier move to right Competition moving to emerging markets Availability of new labour Competition is becoming better or cheaper Improve performance/value Delivery, Quality, & Cost

7. 7 7 Introduction Introduction 4-focus approach to operational excellence 1. Strategy 2. Processes 3. People 4. Systems Value Adding Standardized Continuous Improvements Strategic Planning Strategic Deployment Goal Setting Accountability & Commitment Engagement & Development Competence & Confidence Automate ERP Efficiency Poke-Yoke Visual Mgmt

8. This is a photographic template – your photograph should fit precisely within this rectangle. Strategy Processes People Systems

9. 9 9 Strategy Strategy Key dimensions of a strategic plan Strategic Plan - Growth Strategic Plan - Growth Business Unit & Group Overview Market Analysis SWOT Analysis (situation analysis) Technology Road Map Product Developments Competitive Analysis Investment Opportunities Product Strategy Value Proposition Mfg. Strategy Internal External

10. 10 Strategy Strategy Value analysis to identify core manufacturing activities CoreNon-Core High Utilization Low Utilization Maintain/ Optimize Outsource BCC Right-size / Consolidation Outsource Experts Product/Process

11. 11 VSM, Product Grouping & Capacity Planning 5S, Visual Management & Tiered Meetings 5S, Visual Management & Tiered Meetings Kan-Ban Parts withdrawal Kan-Ban Parts withdrawal Super Market Line feed Milk-Run Line feed Milk-Run Strategy Strategy Maximize performance through best manufacturing practice Move beyond 5S+ to unlock potential in organization. Flow cells Material Pull Smoothed production Paced ops Flexible & leveled production Variation Reduction & Six Sigma Variation Reduction & Six Sigma Six Sigma processes Visual Factory Balanced & Standard Operations Flexible Cells & Error Proofing Flexible Cells & Error Proofing Standard Work instructions

12. 12 Strategy Strategy Deployment – Create alignment, accountability and commitment. Strategic deployment matrix and scorecard - Organizes thinking and links action to strategy - Aligns functions for goal setting - Identifies/Establishes break-through actions - Provides tools for continuous improvement - Communicates goals and performance

13. 13 Strategy Strategy Set stretch metrics and identify breakthrough initiatives HOW FAR All items are listed in priority order starting from the center HOW WHAT HOW MUCH WHO

14. 14 Strategy Strategy The whole picture of your company on one sheet of paper HOW FAR WHAT HOW MUCH Use dots to show relationship of Improvement Priorities to Annual Objectives Use dots to show relationship of Targets and Resources to the Improvement Priority NOTE: Only Solid dots on a resource deploy to the next level Use dots to show relationship of Annual objectives to 3 year strategic plan

15. 15 Strategy Strategy Example of SD-Matrix

16. 16 Strategy Strategy Improvement priorities cascaded to the point of impact Second Level – Plant/Business Top Level – Company/Group Third Level Sub Plant/Dept The level where root causes are addressed! Action Plans can be initiated out of any matrix level. Action Plan

17. 17 Strategy Strategy Each target is copied to the SD score card

18. 18 Strategy Strategy Action plans drive the rate of improvement ACTION PLAN

19. This is a photographic template – your photograph should fit precisely within this rectangle. Processes Strategy Processes People Systems

20. 20 Process Process Lean Management PhilosophyProcessFocus - PDCA - Leader Standard Work Visual Controls Standard Accountability Processes A Foundation for Operations Excellence

21. 21 Process Process Good Leaders Execute & Improve PlanDoCheckAct A-WorkA-Work A-work – Value Creation Process – Delivery & Quality + B-work – Improvement Process – Faster, Better & Cheaper = Focused team with a continuous improvement culture Business Operating System Balanced Scorecard Standard Work Visual Management GEMBA Accountability HPWT B-WorkB-Work Business Operating System VSM GEMBA Root Cause Analysis Process – FMEA Lean Six Sigma LSSS HPWT Lean Councils PlanningPlanning Strategic Planning Strategic Deployment Profit Planning

22. 22 Process Process Tiered meeting accountability and execution process – A-Work Tier 1 Tier 2 Tier 3 Agenda / Focus Cell Lead Team members Mfg Manager Value Stream Leader Support Mgr Values Stream Leader Cell leaders Support group Attendees Escalation Labour Plan Daily rotation Cell issues/solutions (Forward looking)) Daily performance data (yesterdays) - Safety - Quality - Delivery - Cost Overdue items and actions Labour Plan Daily rotation Plant Issues Improvement actions Develop efficient Tier Meetings: - Short and crisp- Stand-Up - Visual- Close to workplace - Structured and standardized agenda Develop efficient Tier Meetings: - Short and crisp- Stand-Up - Visual- Close to workplace - Structured and standardized agenda

23. 23 Process Process Example - Tiered Meetings in action…. Accountability BoardA-Work Metrics Board

24. 24 Process Process Standard leaders work to ensure leaders react to signals Standard and aligned schedule Process confirmation

25. 25 1. Actual vs. Plan Assess the impact 2. Pareto analysis Prioritize the impact 3. Commentary Identify Root Cause 4. Improvement action plan Drive Short term containment Implement Long term prevention 12 3 4 Process Process Data driven improvement process – Balanced Scorecards – B - work

26. This is a photographic template – your photograph should fit precisely within this rectangle. People Strategy Processes People Systems

27. 27 People People Transition away from a traditional manufacturing organization Plant Manager ManufacturingQualityEngineeringSupply Chain Manufacturing Engineering Human Resources Continuous Improvements Department Manager 1 Department Manager 2 Department Manager 3

28. 28 QualityM.E Supply Chain PlanningEHSC.IQualityM.E Supply Chain PlanningEHSC.I People People To a value stream centric organization with high performing teams QualityM.E Supply Chain PlanningEHSC.I Plant Manager Value Stream Manager Cross functional teams Located close to workspace Cross functional teams Located close to workspace

29. 29 People People Redefine the Role of the Front Line LeaderSupervisor Selected based on technical capability / process knowledge Front Line Leader Directive (“Do as I say”) An Expediter Disciplinarian Enforcer Top-down Supportive / Coaching Intrinsically motivated Future vision orientation Life-long learner Selected based on leadership Competencies

30. 30 People People Attract the right leaders Leaders need to… Provide the vision and strategy Lead by example – be a positive role model Actively engage and recognize employees Enable success of your employees (resources, barriers) Empower the employees – drive decision making down through organization Empowerment Leadership to create the environmentEmpowerment Values and ethics A balanced Leadership Team Values and ethics A balanced Leadership TeamEngagement Leadership to drive and stimulate changeEngagement

31. This is a photographic template – your photograph should fit precisely within this rectangle. System Strategy Processes People Systems

32. 32 System System Create flow cells and an environment to support flow. High productivity assembly cell Kan-Ban driven Super Market Poke-Yoke Pace board A-Work Line Fed material at Point of Use System Bar-Coding

33. This is a photographic template – your photograph should fit precisely within this rectangle. Moving Forward

34. 34 Moving Forward Moving Forward Pilot Line

35. 35 Moving Forward Moving Forward Systematic approach to achieve excellence